Exxon Mobil (NYSE:XOM) has disclosed that it expects to incur $2.4B-$2.6B in impairments in the fourth quarter related to its upstream business. The majority of these impairments are linked to idled assets in California. The company also stated that changes in oil prices would result in a decrease of $400M-$800M in upstream earnings for the quarter, in comparison to the $6.1B reported in the third quarter.

In an SEC filing, Exxon (XOM) revealed that “continuing challenges in the state regulatory environment have impeded progress in restoring operations” at its idle Santa Ynez assets and related facilities in California.

The company temporarily suspended production at its Santa Ynez oilfield after a 2015 pipeline leak before resuming crude shipments via trucks, which were subsequently restricted by state regulators citing environmental risks.

Additionally, Exxon (XOM) mentioned that reduced Q4 earnings from lower oil prices would be partially offset by higher natural gas prices, while a $1.5B-$1.7B drop in refining earnings would be partly mitigated by a $1B-$1.4B gain in unsettled derivatives.

Earlier this week, Chevron warned that it would take $3.5B-$4B in writedowns on its upstream assets, primarily due to California’s energy policies.

Exxon (XOM) anticipates revealing its complete Q4 results on February 2.